MeenaKrishnamsetty

JasonSeo

Billionaire Stan Druckenmiller is one of the brilliant investors we get to track via 13F filings. These filings are excellent sources of investment ideas. Historically the most popular stocks among hedge funds have outperformed the market on average. We launched a small-cap strategy 18 months ago and this strategy's quarterly picks returned 80% in 18 months (see a sample of its picks). Druckenmiller is one of the billionaires whose filings help us identify great stocks. Here are some things we noticed when comparing Druckenmiller's filing for the end of December with previous filings:

New buys in big pharma One of the more striking themes from Druckenmiller's 4Q13 13F filing was an increased bet on drug manufacturers. He initiated new positions in two branded drug manufacturers, Bristol-Myers Squibb
BMY, -0.41%
and AstraZeneca
AZN, -1.91%
as well as a generic specialist with a growing branded business, Teva Pharmaceutical Industries
TEVA, +0.52%
At the same time, he increased his stake in Johnson & Johnson
JNJ, -0.18%
by 82%. With each company having different drugs in various stages of development, these stakes could be a diversified bet on one or more new blockbuster drugs getting one step closer to receiving FDA approval or a more defensive portfolio posture following the strong market rally in 2013. Ken Griffin placed a $325 million new bet on BMY during the last quarter. Sean Cullinan and billionaire George Soros were buying TEVA.

FedEx. Druckenmiller initiated a new position in shipping company FedEx
FDX, +0.28%
which became his second largest holding. Although customers have been opting for cheaper delivery options vs. FDX's express shipping service, the seasonally strong holiday season and benefits from recent restructuring efforts could have been reason enough to buy this stock during 4Q. Bill Gates' Foundation, Dan Loeb, and George Soros are among FedEx shareholders. Druckenmiller used to work with Soros, so it is interesting to see them investing in the same companies.

Wireless towers. Another new theme was Druckenmiller's new positions in wireless communication tower operators Crown Castle International
CCI, -0.56%
and SBA Communications
SBAC, +0.67%
This seems to be a bet that, following American Tower's
AMT, -0.71%
conversion to a REIT, competitors will follow suit. Subsequently, CCI announced in early January that it will operate as a REIT effective January 1, 2014. Bill Gates' Foundation, George Soros, billionaires Stephen Mandel, Andreas Halvorsen, James Dinan, and Howard Marks were also buying Crown Castle during the fourth quarter.

Still bullish on tech. Continuing a theme from the previous quarter, Druckenmiller remains bullish on two tech heavyweights, Google
GOOG, +0.42%
and Amazon
AMZN, -0.13%
Google is the second most popular stock among 650 equity hedge funds we are tracking (see the 10 most popular stocks among hedge funds). He increased his position in GOOG, which rallied 28% in 4Q13, by 4% and cemented its status as his top holding, accounting for whopping 17.4% of his portfolio. Similarly, AMZN, a newly initiated position during 3Q13 that also returned 28% in 4Q13, maintained its fourth place ranking in the portfolio. Although both companies are leaders in their respective fields, AMZN's valuation multiples are clearly higher, given investor expectations that its continued dominance in online retailing will eventually lead to lower spending and higher profitability. On the other hand, GOOG is already highly profitable, which is reflected in its estimates and, hence, its more reasonable valuation levels.

Energy. Another theme that continued from 3Q13 was a bullish bet on oil and gas, with Druckenmiller increasing his exposure to oil-field services provider Halliburton
HAL, -0.11%
by 30% and independent exploration and production company Pioneer Natural Resources
PXD, +0.63%
by 38%, while maintaining Schlumberger
SLB, -1.19%
as his top two holding. In addition, he initiated new positions in two refiners, Valero Energy
VLO, -0.21%
and Marathon Petroleum
MPC, -0.27%
as well as another oil-field services company, Baker Hughes
US:BHI
On a related note, Druckenmiller seems to be making a bullish bet on another commodity, aluminum, via its new purchase of Alcoa
AA, -1.21%
George Soros, Leon Cooperman, Steve Cohen, and Izzy Englander are bullish on Halliburton.

Sales. Druckenmiller sold out his entire stakes in Nokia
NOK, -0.17%
and Herbalife
HLF, +0.21%
during 4Q, which was a bit surprising as both names were new purchases during 3Q. However, given the 25% / 13% rally in NOK / HLF, respectively, during the quarter, it is safe to assume Druckenmiller made a tidy profit on these stocks.

Insider Monkey's small-cap strategy returned 67.8% between September 2012 and January 2014, beating the S&P 500 index by more than 37 percentage points. Download a free sample newsletter by clicking the link above.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information.
All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only.
Intraday data delayed at least 15 minutes or per exchange requirements.